How to Prepare An Acceptable Exit Strategy for Your Home Insurance?

What is the exit strategy?

It is a plan for what will happen with your home insurance when you retire. The lender/credit provider will need to ensure that you will be able to afford the repayments without having to sell your property.

You will have to show the lender/credit provider how you can pay off your home insurance when you reach retirement. It is best to explain why you are required to show the lender/credit provider an acceptable exit strategy through the following example. The example assumes:

>> You are 52 years old

>> You want to buy owner-owned property

>> You want to apply for a $300,000 home insurance, and

>> You have $300,000 in pension

From the example above, you can include the following in your home insurance application:

>> You have $300,000 in pension

>> You plan to work full time until age 65, and

>> After you turn 65, you plan to work part-time for 5 years

What do lenders/credit providers consider acceptable exit strategies?

Some examples of an acceptable exit strategy include:

>> Sell your investment property or other assets

>> Your income or pension payments

>> Downsize your property (if possible)

>> Types of investment or other income you will continue to receive when you retire

How do I show in my home insurance application that I have an acceptable exit strategy?

Here are a number of ways you can show that you have an exit strategy. In your home insurance application, state the following:

>> You have assets (such as retirement or stocks)

>> You have ownership rights to property or other property

>> You are planning to move from full-time to part-time work

>> You are planning to retire permanently

>> You may receive an inheritance later (this may be acceptable to some lenders/credit providers)

>> Are you ready to get a reverse mortgage at retirement

You should keep in mind that the general financial situation of borrowers plays a much larger role for Australians aged 50 and over who are looking to borrow to purchase their own home or investment property. This means that the lender/credit provider has to document each client’s asset and liability position to show how their mortgage insurances will be paid off once the client retires or when the client dies. Therefore, it is important for you to provide an accurate and acceptable exit strategy.

Can anyone help me set up an exit strategy?

You can speak to professionally qualified and experienced finance brokers. They are well aware of what lenders/credit providers want to see in your application and will:

>> Advise you on how to secure additional financial resources during retirement, and

>> Help you get the comfortable level of surplus funds you need to pay off your home insurance debt

They have complete knowledge of housing insurance exit strategies and can help you prepare a suitable exit strategy (if needed) for the following reasons:

>> They understand how important it is to provide all the required information in the best possible way to give the best chance of getting approved for the insurance

>> They will be in your corner because they understand how lenders/credit providers work,

>> They can do all the legal work for you in applying for a high-quality home insurance

So, don’t worry about finding an acceptable exit strategy for the lenders/credit providers. A qualified finance broker will make sure that you get the home insurance easily and without any stress.